Information Spillovers from Protests Against
Corporations: A Tale of Walmart and Target
Lori Yue, Hayagreeva Rao, Paul Ingram
Motivation
From 1998 to 2008, Walmart made 2,050 proposals, encountered 805
protests, and managed to open 1,234 stores.
Target floated 1,110 proposals, attracted only 74 protests, and was
able to open 1,046 stores.
What explained the striking difference in the protest rates experienced
by Walmart and Target?
Popular Media’s Explanation
• Walmart is a poster child of extreme capitalism
• Target has a benevolent corporate image
Activists argue that Target is not really that
different from Wal-Mart
•
•
•
•
•
Serres, 2005; Bustillo and Zimmerman, 2010
A tough anti-union attitude
Wages and benefits mirror Walmart’s
Super Target has similar impacts as Walmart Supercenter
Walmart is a regular contributor to community causes
• “Why is Walmart the bad guy?”
A New Explanation: Information Spillover from
Social Movement Activism
• A framework with three parties: a first-mover (Walmart), a secondmover (Target), activists
• Information asymmetries. Activism against the first-mover signals a
community’s preference
• Second-mover receives the signals and better positions itself
Walmart and Target Store Location, Before 1998
2322 Walmart stores
764 Target stores
Walmart and Target Store Opening: 1998-2008
1311 Walmart in triangles
1004 Target in dots
Hypotheses
H1: Protest events against Walmart have a curvilinear (+,-) relationship with
Target’s entry.
H2: Walmart’s withdrawals due to protests have a curvilinear (+,-)
relationship with Target’s entry.
H3: Walmart’s successes in overcoming activists have a positive relationship
with Target’s entry.
Data and Methods
Data: All the 25,375 places in the U.S. from 1998 to 2008. Due to the
creation of time-lagged variables, the sample used in the final
estimation include all the years from 2001 to 2008.
Store Proposal and Protest: A media search from 1998 to 2008 using
the Lexis-Nexis, the America’s News, and the Sprawl-Busters
databases. Matched with a list of Walmart/Target store openings from
1998 to 2010.
Variables
Dependent Variable: A dummy variable to indicate whether Target
proposed to open a new store in a place in a year
Independent Variables:
• Anti-Walmart protest
• Walmart’s withdraw due to protest
• Walmart’s success despite protest
Control Variables: Community characteristics (population, income per
capita, unemployment, urban, race, and region), political ideology (Pro
Democrat, hazard of institutional escalation ), organization of
mobilization (anti-Target protests, union, church, Main Street Program)
; retail economy (distance to Target d.c., Wal-Mart and Target stores
within 5 miles); the effect of media (media’s attention, unfavorable
editorials)
Estimation
Problem: Unobserved heterogeneities that simultaneously affect
Walmart’s proposal (Y1), anti-Walmart protests (Y2), Walmart’s
withdrawals (Y3), and Target’s entry (Y4)
Solution: Conditional Mixed Process (CMP) Model (Roodman, 2011)
Y1  I (  j  1  (Y1   1 X 1   1 )   j ), j  1 ... 16
*
Y2
Y1  0
 I (  k  1  (Y 2
Y3
Y1  0
 I (  l  1  (Y3
*
Y1  0
*
Y 4  I (Y 4
*
Y1  0
Y1  0
  2 X 2   2 )   k ), k  1 ... 12
  3 X 3   Y 2   3 )   l ), l  1 ... 11
  4 X 4   Y 2   Y3   4  0 )
 1 
 
2 
   ~ N 4 (0,V )
 3
 
 4
0
.005
.01
.015
.02
Estimated Probability of Target’s Entry with 95%
Confidence Interval
0
1
2
3
4
5
6
7
Wal-Mart's Withdrawn Due to Protest
8
9
Walmart’s Withdrawl Due to Protest
10
11
.01
.02
.03
.04
.05
Estimated Probability of Target’s Entry with 95%
Confidence Interval
0
1
2
3
Wal-Mart's Success in Overcoming Activists
Walmart’s Success Despite Protest
4
Discussion & Conclusion
Theoretical Contribution
1. The literature on private politics has emphasized the direct effect of
protests on their intended opponent, and overlooked information
spillovers from protests.
2. We distinguished between two types of spillovers, one type
produced by the incidence of protest and a second type from a
targeted firm’s response.
3. We contribute to the strategy literature on market entry by showing
second-movers benefit from a first-mover’s exposure to protests.
4. For organizational learning, we show that social movement activism
constitutes another form of information spillover between
organizations.
Extension & Revision-mechanism & market size